EXPLAINED: Automotive Industry Inventory Shortage

Current car shoppers are experiencing the automotive inventory shortage firsthand. New vehicles are few and far between. Used vehicle prices are skyrocketing and trade-in values are unheard-of. Dealership sales lots look like empty parking lots. Why is there an inventory shortage? What is a semiconductor anyway? Never fear! OneRequest is here to help you navigate the shortage and shop smarter, not harder.

Why is there an inventory shortage?

Like just about everything since March 2020, you can start in one place: the pandemic. Like the rest of the world, auto manufacturing plants temporarily shut their doors last year. Now that life is returning to “normal” (whatever that means these days), the demand for cars is ramping back up and the auto industry and its semiconductor suppliers are struggling to meet surging demand. Nearly every automotive brand has shut down at least a portion of its operations during 2021 due to a lack of available semiconductors.

Also, it is important to remember that the auto industry isn’t the only industry competing for these chips. Just about every electronic device you can think of is powered by semiconductors: mobile phones, batteries, and all those laptops everyone bought last year to work from home. While the auto industry halted production, semiconductor sales in other industries skyrocketed. The auto industry is just one of many in line for more semiconductors. It’s a long line right now.

What is a semiconductor?

We could write an entire blog post about the complex characteristics of a semiconductor, but we’ll keep it simple. Semiconductors–sometimes referred to simply as chips–do exactly what their name implies: they conduct electricity between a conductor and an insulator, which is a material where an electric current does not flow freely. Nearly every electronic feature of new cars is powered by semiconductors: lane detectors, back-up camera sensors, airbags, blind spot detection, adaptive cruise control, and emergency braking are just a few examples. Without semiconductors, it’s back to the old days of no radio and crank windows (also no GPS—maybe that’s a good thing?). But we digress…

Semiconductors don’t just power safety and entertainment features. They are critical in the function of the engine, transmission, and, well, just about every component of a car. Cars in 2021 are essentially computers on wheels.  Electric and hybrid vehicles have even more components powered by semiconductors. Without these chips, new cars are virtually inoperable.

How is the shortage affecting the used car market?

Used cars aren’t directly impacted by the chip shortage, but dealers are paying top dollar for used cars to fill their lots. This is great news if you’re looking to sell! On the flip side, it’s not so great if you’re looking to buy. Due to short supply and elevated demand, used car prices have gone through the roof. Some buyers are paying more than a used vehicle’s original MSRP.

What does this mean for me as a car shopper?

The inventory shortage is complex and constantly changing. Buying a new car is difficult enough during normal times, and buying one during an inventory shortage can seem virtually impossible. From increased prices to decreased inventory, the chip shortage makes an already less than enjoyable process even more stressful.

If you’re looking for a new car, the chip shortage will make it more difficult to find exactly what you want and get it fast. If you’re buying used, you may have to spend more than you anticipated to close the deal.


How can OneRequest help?

If you’ve been on a car lot lately, you may have noticed less cars than usual, but OneRequest allows you to search the nation’s inventory to find your new car. With OneRequest’s anonymous communication feature, you don’t have to worry about being bombarded with calls, texts, and emails.

Prefer to have someone complete the entire car buying process for you? Try OneRequest Concierge. We find your car, negotiate with dealers, work through trade-in details, figure out transportation, and explore financing options while you relax.

Looking to take advantage of the demand for used cars and sell your vehicle? Use OneRequest’s “Sell My Car” feature! We shop your vehicle to our network of dealers while keeping your personal information private. You choose the offer that works for you, and we connect you to the dealer.

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